China’s Anti-Corruption Campaign

Through its 30-plus years of economic modernization, China has seemed to stick to efficient levels of corruption. Connected families got very rich, but most families did better than they had before.

An increasingly important question for Xi Jinping’s time in office, which bears on the even more urgent question of whether China can make progress against its environmental catastrophe, involves the levels and forms of Chinese corruption. Has it begun passing from tolerable to intolerable levels? If so, does Xi Jinping have the time, tools, or incentive to do anything about it? Will exposing high-level malfeasance—like the astonishing recent case of Zhou Yongkang, who appears to have taken more than $14 billion while he held powerful petroleum and internal-security roles—encourage the public? Or instead sour and shock them about how bad the problem really is? Is it even possible to run a government and command a party while simultaneously threatening the system that most current power-holders have relied on for power and wealth?

Adam Minter highlights one example of everyday corruption: the pocketing of the fines China collects from parents who violate the one-child policy:

The problem, according to Chinese media reports, is that quite a bit of that revenue doesn’t seem to land in government treasuries. In rural Yunnan Province, for example, audits suggest that in one county as little as 10.18% of social compensation fees flowed into government coffers. In Chongqing, 68 million yuan ($11 million) worth of social planning fees failed to find their way to the treasury.

Needless to say, the stench of corruption hangs heavy over such discrepancies. In Yunnan, officials were found to be using social maintenance fees to pay for personal expenses, including medical bills. In some regions, local authorities allow officials who collect the fees to keep a certain percentage of them. The situation — whereby officials are incentivized to hunt down children for their revenue-generating potential — is both untenable and perverse.